Boeing plan for finishing center to stir up China market

A Boeing 737 jetliner at the assembly plant in Renton, Washington. The aircraft maker has forecast that China will need 6,330 new airplanes over the next 20 years. [Photo/Agencies]

Aircraft maker considering more strategic alliances

Boeing Co is considering plans to set up a 737 jet completion and delivery center in China, according to a Seattle Times report, indicating that competition in the Chinese aircraft manufacturing market is heating up.

The newspaper quoted persons familiar with the deal and said the announcement is likely to be made during President Xi Jinping's visit to Seattle later this month. Xi is also expected to announce new orders for Boeing aircraft during his visit.

The report said that the Seattle-based company will continue to assemble all Boeing 737s destined for Chinese carriers at its current factory in Renton, Washington. It will then ship the same to the new finishing facility in China for installation of interiors, painting of exteriors, flight tests and final delivery.

No further details of the plan were released, such as its Chinese partner, the location of the facility and the timetable, which are still under discussion.

If the reports are confirmed, it would be the first time that Boeing is setting up a finishing and delivery center outside of the United States.

Boeing China declined to comment on the reports, but released a statement on Monday, without giving any indications.

"Boeing is always looking for opportunities to support its growth plans and for productivity improvements. One way we will do this is by working with partners around the world and creating key strategic alliances, including in China, our largest international market," the company said.

"That approach will continue as we build our backlog and meet increased global demand for commercial airplanes. However, we do not comment on options we may be exploring."

The very fact that Boeing is considering a completion and delivery center in China shows the great importance that the company attaches to the China market, aviation experts said.

Boeing expects China to need 6,330 new airplanes over the next 20 years, with a total value of $950 billion. At least 4,630 of these would be single-aisle airplanes, such as Boeing 737 and Airbus 320.

"Despite the current volatility in China's financial market, we see strong growth in the country's aviation sector over the long term," Randy Tinseth, Boeing Commercial Airplanes' vice-president of marketing, said on Aug 25.

Boeing's rival－Airbus SAS－has already established facilities in China and also is expanding its presence.

Airbus set up an A320 final assembly line in Tianjin in 2008. In addition, the company has also extended its cooperation on the A320 final assembly line from 2016 to 2025.

The European aircraft builder has signed an agreement with Chinese partners to build up a completion and delivery center in Tianjin for its wide-body product－Airbus 330－in July.

Airbus delivered 153 aircraft to Chinese carriers in 2014, accounting for 24.3 percent of its global deliveries, while 155 airplanes were bought from Boeing by China during the same period.

Wang Ya'nan, deputy editor-in-chief of Aerospace Knowledge magazine, said that the new center will be able to cater to Chinese demands directly. More importantly, the facility will be an indication that Boeing is keen on being a part of the civil aviation manufacturing industry in China and keen to partner with local firms, Wang said.

"The Airbus 320 final assembly line and the likely Boeing 737 center will put pressure on the C919, China's domestically made passenger airplane, as they are direct competitors," said Wang.